Brazil tax reform: 3 key update — 4 mins
Hey, I’m Douglas, Editor-in-Chief of the Brazilian Tax Reform Portal 🇧🇷.
1) Partners in the U.S.
Flags of the United States and Brazil – Photo: Alan Santos via Agência Brasil
The Brazilian Federal Revenue Service has defined that LLCs (Limited Liability Companies) with non-resident participation in the United States and treated as tax-transparent under U.S. tax law are considered to be in a preferential tax regime (read more)
This means these structures are now classified, for Brazilian tax purposes, as entities with favorable taxation or differentiated tax characteristics, according to the criteria established by the Brazilian tax authority.
In practice, this classification results from the fact that these companies are not directly taxed in the United States, being considered “transparent,” with taxation occurring at the level of the shareholders.
2) Spain
AI-generated image created at the request of the Portal da Reforma Tributária
The Brazilian tax authority has defined that amounts paid as JCP (Interest on Equity) between Brazil and Spain must be treated as interest (read more)
In practice, this means the category now falls under Article 11 of the tax treaty signed between both countries.
Previously, there were doubts as to whether JCP payments could be treated as dividends or follow a separate classification.
The ruling also establishes that any prior interpretations are no longer valid.
3) Netherlands
The Brazilian tax authority has also defined that Interest on Equity (JCP) must be treated as interest for the purposes of applying the tax treaty signed between Brazil and the Kingdom of the Netherlands, aimed at avoiding double taxation on income tax matters (read more)
The text also establishes that any contrary conclusions contained in prior consultation rulings or divergence decisions issued before the publication of this act are hereby modified, regardless of any formal notification to the taxpayers who originally submitted the requests.
🇧🇷🔍 Brazil is changing. Are you watching closely?
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